T.C. Summary Opinion 2004-136
UNITED STATES TAX COURT
JANET L. PICKERING, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12190-03S. Filed October 6, 2004.
Janet L. Pickering, pro se.
Nancy C. Carver, for respondent.
PANUTHOS, Chief Special Trial Judge: This case was heard
pursuant to the provisions of section 7463 of the Internal
Revenue Code in effect at the time the petition was filed. The
decision to be entered is not reviewable by any other court, and
this opinion should not be cited as authority. Unless otherwise
indicated, subsequent section references are to the Internal
Revenue Code in effect for the year in issue, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
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Respondent determined a deficiency in petitioner’s 2000
Federal income tax and additions to tax as follows:
Additions to Tax
Deficiency Sec. 6651(a)(1) Sec. 6651(a)(2) 6654(a)
$6,555 $1,417.72 $661.60 $337.35
After concessions,1 the issues for decision are: (1) Whether
petitioner received unreported income of $17,599.12 in wages,
interest, dividends, and gains from the sale of stock for the
2000 taxable year; (2) whether petitioner is liable for an
addition to tax under section 6651(a)(1) of $1,417.72 for the
2000 taxable year; and (3) whether petitioner is liable for an
addition to tax under section 6654(a) of $337.35 for the 2000
taxable year.
Background
Some of the facts have been stipulated, and they are so
found. The stipulation of facts and the attached exhibits are
1
Respondent concedes that petitioner is not liable for the
addition to tax under sec. 6651(a)(2). In the notice of
deficiency, respondent determined that petitioner received $1,068
in dividends from Merrill Lynch Pierce Fenner & Smith (Merrill
Lynch). Respondent concedes that petitioner received only $721
in dividends from Merrill Lynch.
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incorporated herein by this reference.2 At the time the petition
was filed, petitioner resided in Sterling, Virginia.
During the 2000 taxable year, petitioner received the
following: (1) Wages of $1,972 from the Loudon Baptist Temple;
(2) interest of $1,643 from both Merrill Lynch Pierce Fenner &
Smith (Merrill Lynch) and Prudential Securities, Inc.
(Prudential); (3) dividends of $1,561 from Merrill Lynch and
Prudential;3 and (4) an income tax refund of $114 from the
Commonwealth of Virginia Department of Tax.
On March 9, 2000, petitioner sold 125 shares of Series A,
8.5 percent cumulative preferred stock in Americo (Americo stock)
and received sale proceeds of $2,963. In January 1994,
petitioner had purchased 560 shares of Americo stock for
$13,864.50. The sale of Americo stock thus resulted in a loss of
$131.75.
2
The stipulation of facts was filed without trial and
without an appearance by petitioner at a trial scheduled for May
12, 2004. By Order dated May 12, 2004, we offered petitioner an
opportunity, if she so desired, to supplement the record by June
11, 2004. During a conference call with the parties on June 22,
2004, we again advised petitioner of an opportunity to supplement
the record. Other than the stipulation of facts and the attached
exhibits, the Court has not received any indication from
petitioner of an intention to supplement the record.
3
As indicated earlier, respondent concedes that petitioner
did not receive $347 in dividends, the difference between what
respondent determined in the notice of deficiency and the
stipulated amount of $721.
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During the 2000 taxable year, petitioner also sold 769
shares of stock in Peco Energy Co. (Peco stock) and received sale
proceeds of $31,581 through the following transactions:4
No. of Date of Sales Date of Purchase
Shares Sale Proceeds Purchase Price
50 02/09/00 $2,045.18 01/10/95 $1,231.25
180 02/15/00 7,177.03 01/10/95 4,432.50
50 04/24/00 2,017.47 01/10/95 1,231.25
50 05/22/00 2,183.76 01/10/95 1,231.25
295 06/20/00 12,202.53 01/10/95 7,264.38
13 06/20/00 537.73 06/30/95 354.10
12 06/20/00 496.37 09/29/95 359.20
13 06/20/00 537.74 12/20/95 391.21
15 06/20/00 620.46 03/29/96 396.91
15 06/20/00 620.47 06/28/96 403.35
17 06/20/00 703.20 09/30/96 410.09
17 06/20/00 703.20 12/20/96 431.81
21 06/20/00 868.66 03/31/97 439.59
21 06/20/00 868.66 06/30/97 449.24
The sale of Peco stock resulted in a gain of $12,554.87.
Petitioner made estimated tax payments of $254 for the 2000
taxable year. In addition, petitioner requested, and respondent
granted, two extensions of time to file a tax return for the 2000
taxable year. Despite these extensions, petitioner did not file
a return for the 2000 taxable year.
As we indicated earlier, respondent determined that
petitioner received unreported income and that she is liable for
certain additions to tax for the 2000 taxable year. Respondent
4
While the parties stipulated that petitioner received
sale proceeds of $31,581, petitioner’s annual statement from
Merrill Lynch indicates that she received proceeds of $31,582.46.
This difference is immaterial, and we accept the stipulated
amount.
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further determined that petitioner’s filing status is “married
filing separate return” and that she is entitled to the standard
deduction and a personal exemption deduction for the 2000 taxable
year.5
Discussion
Generally, the burden of proof is on the taxpayer. Rule
142(a)(1). However, if the taxpayer satisfies the limitations
under section 7491(a)(2) and introduces credible evidence with
respect to any factual issue relevant to ascertaining the tax
liability, then the Commissioner bears the burden of proof with
respect to such issue. Sec. 7491(a). Moreover, if a taxpayer
asserts a reasonable dispute with respect to the income reported
on an information return and fully cooperates, then the
Commissioner shall have the burden of producing reasonable and
probative information in addition to such information return.
Sec. 6201(d); Tanner v. Commissioner, 117 T.C. 237 (2001), affd.
65 Fed. Appx. 508 (5th Cir. 2003); McQuatters v. Commissioner,
T.C. Memo. 1998-88. In the present case, petitioner has not
satisfied the requirements of either section 6201(d) or 7491(a).
Unless indicated otherwise, the burden of proof remains on the
petitioner.
5
Petitioner contends that she is entitled to itemized
deductions and dependency exemption deductions for the 2000
taxable year. Petitioner has not offered any evidence to support
her contention, even though, as we indicated earlier, the Court
has permitted her to supplement the record.
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Unreported Income
A taxpayer’s gross income includes all income from whatever
source derived, including (but not limited to) compensation for
services, gains derived from dealings in property, interest, and
dividends.6 Sec. 61(a)(1), (3), (4), (7). In the present case,
petitioner received wages of $1,972, dividends of $1,561,
interest of $1,643, a gain of $12,554.87 from the sale of Peco
stock, and a loss of $131.75 from the sale of Americo stock.
Accordingly, petitioner’s gross income for the 2000 taxable year
is $17,599.12. We sustain respondent’s determination on this
issue to the extent of this amount.
Addition to Tax Under Section 6651(a)(1)
If a Federal income tax return is not timely filed, an
addition to tax will be assessed “unless it is shown that such
failure is due to reasonable cause and not due to willful
neglect”. Sec. 6651(a)(1). A delay is due to reasonable cause
if “the taxpayer exercised ordinary business care and prudence
6
A taxpayer’s gross income also includes a refund of State
income tax in the year received to the extent that said tax was
claimed as a deduction in any prior taxable year and resulted in
a reduction in Federal income tax. See sec. 111(a); Kadunc v.
Commissioner, T.C. Memo. 1997-92. While the record indicates
that petitioner received in 2000 an income tax refund of $114
from the Commonwealth of Virginia Department of Tax, said amount
was not included in petitioner’s gross income as part of
respondent’s determination, and respondent did not raise this
matter at any time after the issuance of the notice of
deficiency. Accordingly, we do not address whether the State
income tax refund was includable in petitioner’s gross income for
the 2000 taxable year.
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and was nevertheless unable to file the return within the
prescribed time”. Sec. 301.6651-1(c)(1), Proced. & Admin. Regs.;
see also United States v. Boyle, 469 U.S. 241, 243 (1985). The
Commissioner has the burden of production with respect to the
liability of any individual for an addition to tax under section
6651(a)(1). Sec. 7491(c). The burden of showing reasonable
cause under section 6651(a) remains on petitioner. Higbee v.
Commissioner, 116 T.C. 438, 446-448 (2001).
In the present case, respondent met his burden of production
with respect to the addition to tax under section 6651(a)(1).
Petitioner did not file a return for the 2000 taxable year. Nor
did petitioner provide any evidence to establish she had
reasonable cause for the failure to timely file. Respondent’s
determination as to this issue is sustained.
Addition to Tax Under Section 6654
Section 6654(a) provides for an addition to tax “in the case
of any underpayment of estimated tax by an individual”. The
amount of the underpayment is the excess of the “required
installment” over the amount (if any) of the installment paid on
or before the due date for the installment. Sec. 6654(b)(1).
The amount of the required installment, in turn, is 25 percent of
the required annual payment, which is the lesser of (1) 90
percent of the tax shown on the return for the taxable year (or,
if no return is filed, 90 percent of the tax for such year), or
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(2) if the taxpayer filed a return for the immediately preceding
taxable year, 100 percent of the tax shown on the return of the
individual for the preceding taxable year. Sec. 6654(d)(1)(A)
and (B). The Commissioner bears the burden of production in any
court proceeding with respect to the addition to tax under
section 6654. See sec. 7491(c). The Commissioner need only make
a prima facie case that imposition of the addition to tax is
appropriate. Mackey v. Commissioner, T.C. Memo. 2004-70.
In the present case, respondent did not meet his burden of
production to establish a prima facie case that imposition of the
addition to tax is appropriate. Petitioner made estimated tax
payments of $254 for the 2000 taxable year. We cannot conclude
from the record whether this amount is sufficient as the required
annual payment under section 6654(d)(1)(B) because we cannot make
a comparison with the tax shown on the return for the preceding
taxable year. Accordingly, we deny respondent’s determination
regarding this issue.
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
Decision will be entered
under Rule 155.